Advisers Disagree on Measuring Outcomes

Even with a majority of financial advisers agreeing that retirement planning is a major part of their business, conflict persists over how to track retirees’ success in meeting financial goals.  

That’s the upshot of the Q3 Financial Professional Outlook survey, released Thursday by Russell Investments. Survey researchers found that more than seven in 10 (73%) advisers count retirement planning as a significant or core part of their work, but that majority continues to use a plurality of methods to actually measure client success.

The definitions advisers use to measure client outcomes break down as follows: Slightly more than one-third (34%) of advisers pointed to the preservation of principal after distributions as the best method to measure retirement plan success. Two in 10 respondents (20%) said they judge a plan’s success according to the maintenance of a projected rate of return. Another 15% of advisers called the net present value of projected assets against projected liabilities the most important measure of retirement plan success.

Whatever the measure used by advisers, it is vital that financial professionals and their clients find a meaningful reference point to discuss sustainable income in retirement, Rod Greenshields, a consulting director for Russell’s U.S. adviser-sold business, said in a statement accompanying the survey.

“This reference point needs to be tied to actual desired outcomes,” Greenshields said. “Yet today, very few advisers are approaching retirement income planning in this way.”


Adviser Optimism Continues to Grow

The survey also tested adviser optimism, finding the number of advisers who reported feeling optimistic about the capital market’s three-year outlook had jumped eight points from the previous quarter, reaching 83%.

Other findings showed advisers are seeking additional tools and resources to help grow client wealth.  

More than half (53%) of advisers said they wish they had more planning and implementation tools to increase expertise in retirement income planning. Others (45%) indicated a desire for more seminars and workshops, while 35% hoped for new self-study materials.

Also notable in the survey findings: More than eight in 10 advisers (81%) favor a total-return strategy for income generation, with just 7% reporting to use a yield-seeking approach.

More about the survey results and methodology can be read here.